Rupee ended down at a three-week low against the US dollar

Rupee ended down at a three-week low against the US dollar today because banks bought the greenback noting the decline in local share indices and also to meet importers' month-end dollar demand, dealers said.
The Indian unit ended at 46.9200 rupees compared with 46.6500 per dollar Monday. Rupee swayed in the 46.7700-47.0050 per dollar band intraday today.
"The fall in local shares today triggered some FII outflows today. There was no direct impact of the RBI policy on rupee. Intraday, rupee purely tracked local share," said a dealer with a large UK bank.
Today, the Bombay Stock Exchange's Sensex and the National Stock Exchange's Nifty ended down 2.31% and 2.50%, respectively, on disappointment over the Reserve Bank of India's mid-term monetary policy review for 2009-10
(Apr-Mar).
RBI kept the Repo, Reverse Repo, and Cash Reserve Ratio unchanged as per market expectations, Statutory Liquidity Ratio was hiked to 25%. Gross domestic product growth projection for 2009-10 (Apr-Mar) was kept unchanged
at 6.0% with an upside bias.
RBI also discontinued the refinance windows for banks and foreign exchange swap facility for banks today.
"It (foreign exchange swap facility) was a measure introduced last year when market faced the problem of dollar crunch. Not many banks used it. So it may not have an impact on the forex market," said S. Rajendran, general manager treasury, Union Bank of India.
"Importers were persistently buying dollars in the market today to meet their month-end needs that added to the fall and dragged rupee to the 47 level," said a dealer with a state-owned bank.
Banks also purchased the greenback noting its rise against other Asian currencies, dealers said.
Euro's fall below the $1.5000 mark in the overnight market also added to the Indian units' woes, dealers said.
However, dollar sales from exporters prevented a further decline in the Indian currency, dealers said.
"Exporters had to step in to sell dollars with rupee weakening to 47.00 today. Those exporters who had missed a chance to sell dollars in the past few days, sold it today," said a dealer with a US bank.
Bouts of profit booking also limited the slide in the Indian currency today, dealers said.